CGA. Is it fair?

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#1113098 21-Aug-2014 19:29

dejadeadnz: There isn't a place in the market for cheap, disposable rubbish as a result of the CGA? Have people not seen the likes of The Warehouse and the ubiquitous two dollar shops lately? In all seriousness, some of the anti-CGA posts in this thread are at best bizarre and, at worst, remarkably poor reflections of the thinking skills of some people. It might be better if the CGA offered more clarity and, like any legislation, it can stand improvement but as someone who doesn't have huge axes to grind one way or another (I've rarely had to rely on the CGA) but have provided legally informed advice to both consumers and shopkeepers on the issues, I personally find the arguments being put up by the so called pro-CGA crowd here to be far more convincing.

I wonder if anyone has tried to use the CGA argument at a $2 store, or even taken one to the DT :) People accept that if it breaks, that was their risk. In some ways that is why they exist. You can buy some of the same things at a $2 store, that you can buy elsewhere at 5 - 10 times the price.

dejadeadnz

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#1113103 21-Aug-2014 19:35

Market forces/economic reality does work -- no one of sound mind would argue the toss over a $2 item breaking at the DT, CGA or not. And even if the CGA were gone, some nutjob who's determined to cause a fuss still can. Laws shouldn't be made to address crazy outlying situations.

JWR

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#1113139 21-Aug-2014 20:22

networkn:
Talkiet: I think it's too far in favour of the consumer actually, but I am grateful it's there when the retailer doesn't want to be reasonable...

I have seen people (in my opinion) abusing the CGA.

Cheers - N

I 100% agree. I have seen so many people bullying retailers unfairly and getting away with completely unreasonable things, because they threaten the CGA and the retailer folds because they don't want the "bad" publicity or don't have the time and resources to fight it through a DT process.

A few years ago retailers may have tried to take the mickey, but these days by in large I think it's actually the other way around.

I think the CGA was a very good piece of legislation.

It clearly laid out rights and responsibilities of consumers and retailers in law.

There have always been warranties. But, pre-CGA they often weren't honoured.

So, I don't see the CGA as a valid cost.

If there is fraud on claiming warranties, then I have no sympathy and let the law deal with them.

nathan

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#1113145 21-Aug-2014 20:40

networkn:
mattwnz:
networkn:
mattwnz:
alasta: What the CGA essentially does is remove the opportunity for people to purchase low quality goods in order to save on the upfront cost.

Whether this is good or bad depends on your philosophy around the 'nanny state'. Some people would believe that retailers and consumers should be free to purchase whatever goods they like under whatever contract of sale is agreeable to both parties. Others would argue that the average consumer is not empowered to fully assess product quality and value and should therefore be protected from making bad judgements.

It isn't just a 'nanny state' thing, but it also has the benefit of reducing the overall cost for consumers, as it is universal. I mean for many products you may pay $100 as an addon cost for an extended warranty, which could be thousands a year if you had to pay for some form of extended warranty on every product and service you purchased.
It also keeps people who provide services in line. Otherwise if you get a dodgy trademan, you don't really have any avenues for recourse if they perform a bad service for you. So it would make the disputes tribunal pretty redundant, and if you had to take a tradesman to actual court without the disputes tribunal , it would cost thousands.

One thing about extended warranties is that they are (Usually) more comprehensive and may include additonal benefits, like guaranteed response times, loan equipment, and guaranteed full replacement value replacement item if repair can't be made under a specific timeframe etc.

To some people those additional warranties have some value.

Yes they do, which is why many people buy them, and also as businesses aren't covered by the CGA, they buy them too. I think after recent CGA updates the have improved the extended warranties, as previously many didn't have any benefit over the CGA, infact one I purchased was worse than CGA coverage as it only provided a refund for the current market value of the goods.
In a way you could say that businesses are also subsidising the general consumer with the CGA, although businesses can claim back 15% GST.

And give it to the government ...

No, You charge GST in your sales and income and claim it back for your purchases and expenses

bazzer

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#1113231 22-Aug-2014 08:30

dejadeadnz: There's actually another entirely separate matter that most of the ranters/ravers about how the CGA adds a premium to prices that everyone is forced to pay are missing: the unspoken but completely obvious assumption is that if somehow the unreasonable (in their opinion) CGA coverage were gone, retailers/manufacturers would pass on some or all of the savings to the end customer. What complete and utter economic illiteracy. Prices are set by supply and demand, not merely costs of inputs or general business costs. Then there's the issue of a massive information asymmetry -- few people truly know the extent to which retailers/manufacturers "suffer" as a result of the CGA. In such a case, how are customers to pressure for lower prices were the so called unreasonable CGA rights gone?

Then there are also comparable historical precedents to consider. One example is the Commerce Commission's action that resulted in the banks and the credit card companies agreeing that retailers cannot be banned from imposing surcharges for using credit cards. In general, barring sectors like airlines, only the odd retailer here and there has imposed surcharges AND as far as I am aware few offer genuine discounts for paying cash. Most retailers continue to make no differentiation between cash and credit card payers. Then there are those industries (like PC component retail) where traditionally retailers have generally imposed credit card surcharges -- they have carried on as always. This example suggests that those who think a change in general and/or inputs costs for retailers/manufacturers will instantly result in commensurate or at least interlinked price decreases should really go back to school.

I don't see anyone suggesting that "a change in general and/or inputs costs for retailers/manufacturers will instantly result in commensurate or at least interlinked price decreases", simply that the CGA contributes to the rich tapestry. No one's saying "The CGA adds 5% to the price across the board and if they got rid of it, everything would be instantly 4.8% cheaper!"

). Sure simplistically, price is set by supply and demand, but not surprisingly, businesses consider the costs of inputs or general business costs as well as the price of their output when making production decisions. That's obvious, and to suggest anything less is "economic illiteracy".

nakedmolerat

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#1113271 22-Aug-2014 09:05

mattwnz: I wonder if anyone has tried to use the CGA argument at a $2 store, or even taken one to the DT :) People accept that if it breaks, that was their risk. In some ways that is why they exist. You can buy some of the same things at a $2 store, that you can buy elsewhere at 5 - 10 times the price.

I have bought a toy at the $2 store, cost me $2. Went home, it was broken after a few go.

I went back there and got it exchanged. It breaks again after a few times.

I went back there and get my money back.

bazzer

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#1113310 22-Aug-2014 09:50

I'm no economist, and I'm always keen to be educated, but here's my simplistic thoughts on supply and demand.

We're currently at P1/Q1 (i.e. equilibrium based on the supply/demand curves dictated by the current determinants [S1/D]). If we removed the CGA (or broadly speaking reduced the production costs) the supply curve shifts outwards to S2 (lower costs of production for whatever reason e.g. less QA required, less repairs/replacements needed etc. -> more attractive to produce). None of the determinants of demand change, so equilibrium shifts to P2/Q2. Isn't the "cost" (to consumers) of the CGA P1 - P2?

Isn't this kind of like the effect of removing a tax on goods? Granted things are more complicated than this in real life, but isn't that the concept? I don't mean to say this is explicitly what would happen, in the same way that consumers don't consciously rank bundles when choosing goods.

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Geektastic

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#1113315 22-Aug-2014 09:58

mattwnz:
bazzer:
Geektastic:
bazzer:
Geektastic: Well you appear to be suggesting our statutory warranty policies should be less good than is relatively common elsewhere.

Really? Where?

Incorrectly inferred from this statement:
"Not at all, but just don't fool yourself that you got these rights for free. Surely it could be up to the individual to decide if they want to pay for an extended warranty or not?"

Corrected for you (see here ). I thought we were discussing the merits of the CGA, and I offered up an alternative for discussion. I didn't say that I supported that alternative, in fact earlier I said "I am generally in favour of the CGA". Make of that what you will but I'll try again.

Whatever one's thoughts on the CGA, I don't think one can argue that there aren't compliance costs associated with it ("don't fool yourself that you got these rights for free"). Whether this cost is shared equally between manufacturer, distributor, retailer and consumer or weighted more heavily towards one of them I do not know, but I suspect the consumer ends up bearing the brunt of it.

Is that "fair" (as the OP wrote)? I don't know, but one alternative would be removing the CGA, removing those compliance costs and letting consumers fend for themselves. Presumably the overall cost to the system would be less since, for example, there wouldn't be the admin costs or any consumers exploiting it. The problem is that the costs would be "lumpier", i.e. concentrated in the consumers (like KiwiNZ) that get stuck with a faulty product rather than spread evenly over the entire consumer base. In this market, some people would pay higher prices (i.e. the "extended warranty" I alluded to) in order to get better quality products/service. Some people would rather buy the cheap stuff and deal with the possibility of failure. Couldn't (n.b. not shouldn't) that be an alternative? If not, why not?

You say costs would be lower, but I doubt it would result in lower prices. Also how many retailers actually say that their prices are higher because of the CGA. They often say it is because they don't have the buying power due to quantity and shipping costs. People do already have a choice though not to be covered by the CGA for many products, and that is buying online from overseas. I believe the CGA is more benefical for protection for services.
If it ain't broke...

But where in the world are manufacturers not required to offer warranty with their products? All things like TVs, computers and so forth come with paperwork from Sony/LG/etc etc stating their warranty.

The CGA enhances this in one way. The EU enhanced it another by making it a legal requirement that electronics (for example) must have a MINIMUM of 2 years and warranty must be provided anywhere in the EU regardless of the state in which purchase took place. (i.e. if I buy a Sony TV in Germany and take it home to the UK where it breaks, Sony in the UK must honour the warranty and not require me to return the TV to Germany).

Many American retailers offer 30 day returns (365 day returns in the case of Zappos) and Lifetime warranty policies are quite common from US makers, especially of tools, knives and so forth.

I don't see these things making things more expensive elsewhere which leads me to wonder just what element of our inflated prices in NZ is actually due specifically to the CGA (if any).

bazzer

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#1113323 22-Aug-2014 10:05

Geektastic: The CGA enhances this in one way. The EU enhanced it another by making it a legal requirement that electronics (for example) must have a MINIMUM of 2 years and warranty must be provided anywhere in the EU regardless of the state in which purchase took place. (i.e. if I buy a Sony TV in Germany and take it home to the UK where it breaks, Sony in the UK must honour the warranty and not require me to return the TV to Germany).

What happens outside the 2 year warranty period?

Geektastic

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#1113330 22-Aug-2014 10:15

bazzer:
Geektastic: The CGA enhances this in one way. The EU enhanced it another by making it a legal requirement that electronics (for example) must have a MINIMUM of 2 years and warranty must be provided anywhere in the EU regardless of the state in which purchase took place. (i.e. if I buy a Sony TV in Germany and take it home to the UK where it breaks, Sony in the UK must honour the warranty and not require me to return the TV to Germany).

What happens outside the 2 year warranty period?

AFAIK that is your lot, unless (a) you bought a warranty extension (b) the manufacturer offered more than 2 years when you bought the item or (c) the manufacturers decide to accept the issue as a warranty issue regardless.

Here is Apple's EU consumer warranty as an example - which appears to suggest it extends to 2 years minimum and 5 years in Scotland and 6 years in the remainder of the UK. This provision does not appear to make Apple products more expensive in the UK than they are in NZ.

bazzer

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#1113368 22-Aug-2014 11:02

Geektastic:
bazzer:
Geektastic: The CGA enhances this in one way. The EU enhanced it another by making it a legal requirement that electronics (for example) must have a MINIMUM of 2 years and warranty must be provided anywhere in the EU regardless of the state in which purchase took place. (i.e. if I buy a Sony TV in Germany and take it home to the UK where it breaks, Sony in the UK must honour the warranty and not require me to return the TV to Germany).

What happens outside the 2 year warranty period?

AFAIK that is your lot, unless (a) you bought a warranty extension (b) the manufacturer offered more than 2 years when you bought the item or (c) the manufacturers decide to accept the issue as a warranty issue regardless.

Here is Apple's EU consumer warranty as an example - which appears to suggest it extends to 2 years minimum and 5 years in Scotland and 6 years in the remainder of the UK. This provision does not appear to make Apple products more expensive in the UK than they are in NZ.

But it does make them more expensive than they would be if they didn't have to offer a warranty at all.

You can't make such a simple comparison between NZ and the UK in that way because there are far more factors at play.

1cloud

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#1114707 24-Aug-2014 18:55

Talkiet: I think it's too far in favour of the consumer actually, but I am grateful it's there when the retailer doesn't want to be reasonable...

I have seen people (in my opinion) abusing the CGA.

Cheers - N

Far too many absurd the act

nickrout

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#1114804 24-Aug-2014 21:30

If I buy a so called quality product I expect it to last a decent period of time. My family's first TV was Murphy's 29 inch (or was it 26?). It lasted from the time my parents bought it in about 1967 until well into the late 70's when they bought a colour model. Even then it still worked, it just wasn't used. (Well it worked until I decided I was interested in electronics and dismantled it).

But tell that to the youth of today...

mattwnz

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#1114815 24-Aug-2014 21:47

There was an article in one of the papers about extended warranties over the weeked, and some of them are very expensive, upto 25% of the product price. The difference between them and the CGA they claim, was that they would replace the item if it had a problem, rather than repair if it was the CGA. But I believe under the CGA, if the fault is substantial, then the consumer has the right to request a refund or replacement anyway.

richms

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#1114846 24-Aug-2014 22:23

Businesses shouldnt be subsidizing the CGA as they should be buying from a supplier on a trade account, which basically has in the terms and conditions that it is purchase for use of a business for use of the business so not liable for CGA and sold at a reduced cost. That is why so many places operate a trade showroom and only sell to people identifying themselves as being professionals.

Richard rich.ms

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